Foreign Currency Exchange Report 20 September 2010

20 September 2010

 

Sterling

 

The Pound was almost unchanged last week as Friday saw Sterling pare early gains, closing the day on a loss.  The recent consolidation of Sterling's position is due, in part, to a fairly stable monetary policy outlook with all analysts predicting interest rates to be kept on hold for well into next year.  At the same time, the Pound's correlation with risk sentiment is rapidly fading and there is a feeling in the markets that the Pound could move in either direction moving forward.

 

Last night Rightmove announced that house prices fell 1.1% in the last month, with growth of 2.6% in the year and this morning, Sterling is trading lower across the board.  Later today sees the release of money supply data but those with Sterling trades to make should keep in close contact with their currency brokers as volatility is promised ahead of Wednesday's BOE Monetary Policy Minutes.

 

Euro

 

The Euro exchange rate posted gains across the board last week but unfortunately lost its momentum on Friday as investors became worried about the health of the Euro-zone.  The Irish press leapt on a report published by Barclays earlier in the week which raised concerns about the health of Anglo Irish bank and suggested a default in Ireland was inevitable.

 

Traders sold the Euro heavily and despite contrary arguments from both the IMF and Ireland, the damage was done.  With a decreased appetite for risk, the Euro surrendered ground across the board, notably against the US Dollar.

 

In early trading today, the Euro has pared some its losses with gains against both the Pound and Greenback on the board.  With no major announcements due out in the Euro-zone till Wednesday, the single currency will trade largely on sentiment and on the relative strength of its trading partners.  However, any clients of FC Exchange Ltd with Euros to either buy or sell, should keep in close contact with their currency brokers to ensure opportunities are not missed.

 

US Dollar

 

The Dollar posted gains on Friday as the data pointed to increased inflation and the Greenback received a boost on risk aversion.  The Labor Department reported that consumer prices jumped 0.3% in August, 1.1% on the year, which prompted speculators to buy the Dollar in anticipation of interest hikes to combat inflation, albeit a long way off in the future.  Disappointing consumer confidence figures from the Reuters/Michigan Consumer Sentiment Index also saw the Dollar receive a slight boost as investors bought into the Greenback as a safe haven.

 

In today's trading the Dollar's performance has been mixed ahead of NAHB Housing Market Index figures which are to be released later today.  This week's FED policy meeting will be one to watch out for, however, as traders look to get a firm grasp on the likelihood of further monetary stimulus being pumped into the faltering US economy by the central bank. 

 

Please contact Foreign Currency Exchange on +44 (0) 20 7989 0000 to discuss your currency exchange requirements.